Everything you need to know about lease takeovers
Everything you need to know about lease takeovers
Posted on February 15, 2023
If you're in the market for a car but want to score a deal, consider taking advantage of a Lease Takeover! Lease Takeovers can be a great opportunity to save on your next car (if you do it properly). At Carget, we lease all types of cars and trucks, so we've made this guide to help you learn more about lease takeovers, their pros and cons, and how you can understand if this makes sense for you.
What is a lease takeover?
A lease take over is when a lease transfer takes place from the seller of a lease to a buyer. It typically occurs when the seller of the lease needs or wants to get out their lease early. This person is looking for someone to take over the remainder of the lease contract. The lease buyer inherits the conditions of the lease agreement. Depending on the terms of the lease, the condition and type car, and several other factors, a lease takeover may provide you with great savings.
To evaluate a lease agreement before taking it over, you should familiarize yourself with the most important components of leasing:
- Term: This is the duration of your lease with the current lender. As a lease buyer, you will inherit whatever remains on this arrangement.
- Residual Value: This is the value of the car at the end of the term. The original issuer of the lease has predetermined a value of what the car will be worth at the end of the lease term.
- Market Value: This is the resale value.
- Transfer Fee: Potential be extra fee to transfer a lease.
- Mileage/Kilometre Limits: Each car lease agreement contains a mileage limit, it's usually stated annually. On average, this ranges from 20,000 to 25,000 kilometres per year.
- Wear and Tear: Cars and trucks will degrade or incur damage over time. There's a limit and type of degradation that the leasing company has deemed acceptable. Be prepared to pay fines or fees wear and tear beyond what's covered in the agreement. Wear and tear can be open to interpretation, so be sure to pay close attention to these conditions before taking on a lease.
What are the benefits of lease take overs?
- Up-Front Costs: With Lease Takeovers, buyers don't need to make a down payment, and startup costs are typically lower than a new lease.
- Lower Costs: Buyers benefit from the seller's previous payments which reduce the overall cost of the vehicle. Sellers benefit because they won't be on the hook for early lease termination fees.
- Market vs. Residual Value: If the car's Market Value is higher than its Residual Value at the end of a lease, it could potentially yield a profit if you decide to sell the car after paying it off.
What you should know before taking over a lease
Before a lease take over, make sure to review the lease terms. Pay close attention to the following:
- Kilometre Limits
- Wear and Tear Restrictions
- Lease Transfer Fees
Car Lease Kilometre Limits
Typical Lease Agreements in Canada provide for a minimum of 25,000 kilometres per year. Any kilometre overage incurred can result in financial penalties.
Normal vs. Excess Wear and Tear
Review the lease contract carefully for any stipulations that may be present. You may find yourself in hot water if the current condition of your vehicle is more severe than expected; wear and tear items such as scratches are typically remedied easily and quickly, whereas excess wear & tear complications could take more resources to fix - potentially leaving you with a large expense.
Lease Fees
Always examine the contract for extra charges, for example 'Turn-In' fees or 'Lease Transfer' Fees.
How to get out of your lease
At Carget, we specialize in leasing. Whether you're looking to lease a used car, or just need some help transferring a lease, we're here to help. We can answer all your questions, provide guidance, and facilitate the entire process in a safe and efficient manner.